Menino’s view and the new city economy

Howard Manly

Mayor Thomas Menino has looked at the Boston skyline and likes what he sees — a shiny new skyscraper, the tallest in the city, symbolizing the city’s greatness and its vibrant economy.

Minority business owners look at the same skyline and have a completely different view. According to a study conducted last year, a substantial majority of minority-owned businesses argue that the business of exclusion has not changed since the ugly days of Boston’s past and, in fact, has gotten worse.

Those disparate views are now the problem of one Milton Benjamin. As the new president of the Initiative for a New Economy, a start-up company charged with growing business between minorities and corporate and city officials, Benjamin, 55, must not only bridge those perceptions but also produce results, er, revenue.

“It’s clear that minorities can participate and develop such high-end projects,” Benjamin said, pointing to the recent development of One Lincoln Street, the 36-story downtown building developed by minorities that recently sold for more than $700 million, one of the richest real estate deals in Boston history. “Those capabilities should be transferable to any new skyscraper.”

Benjamin applauded Menino’s vision. “His interest in building a world-class city should include the encouragement of everyone to be included in all of the possibilities,” Benjamin said. “His vision should be seen as an opportunity for a broad base of vendors.”

Menino is trying to make progress by balancing developing minority businesses with the city’s legal obligation to maintain race-neutral policies.

Last year, the city helped sponsor a comprehensive study of minority businesses throughout the state and the results provided a benchmark — and proof of what most already knew — of the gap between white-owned and minority-owned firms.

According to the study, the average minority owned business has two-thirds fewer employees and one-fifth the revenue of the average firm in Massachusetts.

The 25 largest minority-owned companies in the state have combined revenues of slightly over a billion with mean revenue of about $41 million. In comparison the top 25 companies (both publicly and privately held) represent over $117 billion in revenues with mean revenue of $2.6 billion.

The numbers get worse. Of the 60,000 minority-owned firms, only 1,600 are considered to be ready to deal with major corporations. It’s a small wonder that only 27 percent of the minority-owned companies surveyed for the study by the Boston Consulting Group believed that business has improved over the years here in Boston.

On the other side of the equation, corporations are all too willing to develop their business with minority-owned companies but often, according to the study, they don’t know how. Part of the problem is the lack of communication within a corporation between senior management and those who handle day-to-day procurement and contracting decisions. “The result is a yawning gap between the actual and the potential amount of commerce,” the report said.

And that is where Benjamin comes in. A little more than a million dollars has been committed by the city of Boston, the United Way of Massachusetts Bay, the Boston Foundation, Liberty Mutual Group and Blue Cross and Blue Shield to create an inclusive business climate.

Benjamin said that most are on the same page. The problem is in the details. “On the macro level, we are fine,” Benjamin said. “It’s the micro-level that has proven difficult.”

Take accountability, for instance. The study reported that only 20 percent of the state’s major corporations have formal programs to develop minority businesses, and many of those companies do not track or monitor expenditures.

All of this comes at a time when major corporations are trying to cut costs, consolidate suppliers and increase efficiency.

Benjamin knows all too well the difficulty in balancing the business tight rope. For the last 18 years, he worked as president of the Massachusetts Community Development Finance Corp., overseeing an annual budget of about $15 million.

But not all the news is bad. Nordstrom’s, the high-end fashion retailer, is planning to move a store here and has already announced its willingness to work with minority-and women owned businesses. The Seattle-based company has a solid record of doing it since it launched its diversity program in 1989. In 2004, Nordstrom reported expenditures with minority-and-women owned companies at $597.4 million, bringing the company’s total expenditures since 1989 to $5.86 billion.

Nordstrom’s efforts come on the heels of Delta Airlines’ construction of the new Terminal A at Logan International Airport. Delta set a goal of 15 percent for minority contractors on its $325 million budget. At the end of the project, Delta exceeded its goals. About $43 million was spent, roughly 17 percent, with minority contractors. Equally impressive was the fact that 52 different minority contractors shared in the work.

And that is what Benjamin hopes to build upon. “Minority firms must do everything they can to position themselves to do larger scale businesses,” Benjamin said. “And absent any real push from the city’s political leadership, it’s necessary for corporations to insure that that happens.”